Scholarshare To Begin Soon

ARTHUR M. LOUIS

Published 4:00 am, Tuesday, March 30, 1999

Q: When will Scholarshare, that new state-sponsored college savings plan, begin accepting applications? A Chronicle article last year said it would be up and running by February, but I haven't heard anything about it since then.

A: You are correct in assuming that Scholarshare enrollment has been postponed. The latest estimate from the California Student Aid Commission, which will administer the program, is that Scholarshare will accept applications starting around the middle of this year. The program has been delayed by a prolonged search for an investment adviser and by an unexpectedly complicated effort to draft all the necessary rules and regulations.

This generous program -- made possible by the federal Taxpayer Relief Act of 1997 -- will be worth the wait. Although the rules are still being developed, word has it that you may be allowed to contribute as much as $100,000 per child to an investment pool, with the earnings on your money compounding free of federal or state taxes until you make withdrawals to pay for your child's education. Once the money is withdrawn, it will be taxed at the child's tax rate, which presumably will be lower than your own.

More details about Scholarshare can be found on the Student Aid Commission's Internet Web site at www.csac.ca.gov, or by calling (916) 526-7590, Ext. 6.

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